Oil price rises, as Saudi clarifies

Brent crude oil rose by more than 1 per cent toward $US112 a barrel on Monday, boosted by a weak US dollar, strength in gasoline and diesel markets, and as investors weighed a statement from Saudi Arabia disputing claims it has altered its output policy.

Traders also factored in the start-up of a key pipeline expansion in the US, which should help reduce the glut of crude oil that has depressed benchmark US prices in the midwest relative to international rivals.

After last week’s news that Saudi Arabia’s crude output fell in December, a senior Saudi oil ministry adviser told the state news agency that the kingdom cut oil production because of lower seasonal demand.

Tim Evans, an analyst at Citigroup’s Citi Futures Perspectives in New York, said the Saudi statement had given traders “assurances that Saudi Arabian production cuts were not a bid to push prices higher", keeping the $US100 price target announced last January.

Nevertheless, with Brent crude oil already above $US110 a barrel, traders added to price gains on Monday as US gasoline and heating oil futures gained on a series of refinery outages over the weekend.

■ In London, Brent North Sea crude for delivery in February rose US22¢ to $US110.86 a barrel.

■ New York’s main contract, light sweet crude for February or West Texas Intermediate (WTI), eased US23¢ to $US93.33 a barrel.

■ Brent February crude, which expires on Wednesday, rose $US1.24 to settle at $US111.88 a barrel, having seesawed either side of the 100-day moving average at $US111.02. The Brent contract for March delivery rose $US1.11 to $US110.95 a barrel.